Singapore Chooses to Let Cryptocurrencies Roam

A few weeks after South Korea confirmed that it would not ban cryptocurrencies and instead impose a few regulations, recent news from Singapore has established the country’s current stance on this new financial market.

And it is not to ban cryptocurrencies.

While replying to parliamentary questions on the country’s approach towards cryptocurrencies, Tharman Shanmugaratnam, Singapore’s Deputy Prime Minister and Minister in Charge of the Monetary Authority of Singapore (MAS), provided detailed answers on how the immediate future of cryptocurrencies looks like in the country.

Cryptocurrencies are still an experiment

Shanmugaratnam mentioned that cryptocurrencies are still in their experimental phase and will take some time to develop into a complete financial class. He mentioned that while the MAS is “closely studying these developments and the potential risks they pose,” it has not found anything to suggest that there is a “strong case to ban cryptocurrency trading here.”

However, he did mention that anti-money laundering measures will be imposed upon any parties that are involved in cryptocurrency trading, the same way they are levied with any other financial asset class.

People can trade all they want, but the risks are there

While referring to the usage of cryptocurrencies, Shanmugaratnam noted that while the original use-case of cryptocurrencies was intended for payments, they have evolved into a form of investment and to make profits, which has led to this boom in trading for them.

That being said, he pointed to the risks that came with investing in assets that are volatile, mentioning that the government will “keep highlighting to Singaporeans that they could lose their shirts when they invest money in cryptocurrencies.”

Anti-money laundering rules need to be followed

Shanmugaratnam also elaborated on the anti-money laundering aspect that he spoke of earlier in his answers, stating that the anonymity of cryptocurrencies makes them a huge risk regarding non-compliance with anti-money laundering rules.

He mentioned that while measures are already in place where relevant government institutions are on the lookout for suspicious activities, MAS will be imposing additional requirements on entities that are involved in buying, selling, or exchanging cryptocurrencies.

He stated that the regulatory framework was introduced last year for public consultation.

Cryptocurrencies do not pose an immediate risk to the financial system

Noting that cryptocurrency trading in Singapore is not done in as high a volume as other countries, Shanmugaratnam stated that in their current state, the cryptocurrency trading operations in the country are not a threat to its financial system.

Elaborating further, he mentioned that the banking system of Singapore also does not have much to do with cryptocurrencies even when it comes to dealing with international parties.

The effects of cryptocurrencies might change, but so will the regulations

Shanmugaratnam also pointed out that “the cryptocurrency space is rapidly changing and regulatory thinking internationally is still evolving.”

Building upon this notion, he mentioned that the MAS will not only be monitoring such developments, but will also be an integral part of global discussions on how further regulatory measures could be imposed while also ensuring that they remain relevant.

Blockchain is beneficial; cryptocurrencies might be as well

As with other financial authorities, Shanmugaratnam also praised blockchain and mentioned that the MAS does not just encourage the usage of this technology in the financial sector, but is also involved in a few blockchain experiments to determine how beneficial blockchain technology could be regarding “facilitating payments and trade settlements.”

He concluded by stating that the government will keep encouraging such experiments including those involving cryptocurrencies, but will also maintain its vigilance.

He stated:

“We will continue to encourage experiments in the blockchain space that may involve the use of cryptocurrencies, because some of these innovations [sic] could turn out to be economically or socially useful. But equally, we will stay alert to new risks.”